The Particularism of Joseph Schumpeter

Re-reading Joseph Schumpeter’s Capitalism, Socialism and Democracy,[i] I’ve been struck by how insightful it is on many counts, not least his essentially elitist view of society inherited from Pareto and, related, his view that much of human thinking is non-rational and downstream of instincts, which is to say, his basically anti-theorycel view of history. In this article, however, I want to appreciate another aspect of the work which is seldom commented upon: Schumpeter’s thoroughgoing particularism, his steadfast refusal to universalise from particular examples and his keen awareness of the importance of ethnicities and local and national customs. There is much more to be said about this book, but for now I just want to pick out some examples of where this particularism puts Schumpeter ahead of many of his contemporary economists. I will comment on each quotation to draw out what I think is interesting.

Let us start with this amusing little aside about Switzerland:

It may be the case also with societies that are not primitive provided they are not too differentiated and do not harbor any serious problems. Switzerland is the best example. There is so little to quarrel about in a world of peasants which, excepting hotels and banks, contains no great capitalist industry, and the problems of public policy are so simple and so stable that an overwhelming majority can be expected to understand them and to agree about them. (p. 267)

Here Schumpeter argues that the Swiss Canton system of direct democracy cannot be exported because Switzerland has uniquely a non-descript politics in which few series decisions of consequence are ever made.

One nation Schumpeter comes back to again and again in the book is Britain, or more specifically England:

English workmen are well organized and as a rule responsibly led. An experienced bureaucracy of irreproachable cultural and moral standards could be trusted to assimilate the new elements required for an extension of the sphere of the state. The unrivaled integrity of the English politician and the presence of a ruling class that is uniquely able and civilized make many things easy that would be impossible elsewhere. In particular this ruling group unites in the most workable proportions adherence to formal tradition with extreme adaptability to new principles, situations and persons. It wants to rule but it is quite ready to rule on behalf of changing interests. It manages industrial England as well as it managed agrarian England, protectionist England as well as freetrade England. And it possesses an altogether unrivaled talent for appropriating not only the programs of oppositions but also their brains. It assimilated Disraeli who elsewhere would have become another Lassalle. It would have, if necessary, assimilated Trotsky himself or rather, as in that case he would

assuredly have been, the Earl of Prinkipo K.G. (p.299)

The Fabians emerged in 1883, and remained for the whole of our period a small group of bourgeois intellectuals. They hailed from Bentham and Mill and carried on their tradition. They entertained the same generous hopes for humanity as the philosophical radicals had before them. They went forth to work for rational reconstruction and improvement in the same spirit of practical progressivism. They were careful about their facts which some of them took no end of trouble to collect by means of extensive research, and critical of arguments and measures. But they were quite uncritical as to the fundamentals, cultural and economic, of their aims. These they took for granted which is only another way of saying that, like good Englishmen, they took themselves for granted. (pp. 321-2)

Socialist endeavor of the Fabian type would not have amounted to anything at any other time. But it did amount to much during the three decades preceding 1914, because things and souls were ready for that kind of message and neither for a less nor for a more radical one. Formulation and organization of existing opinion were all that was needed in order to turn possibilities into articulate policy, and this “organizing formulation” the Fabians provided in a most work-manlike manner. They were reformers. The spirit of the times made socialists of them. (pp. 323-4)

Here, Schumpeter takes for granted a kind of non-ideological pragmatism that is deep in the English character and argues that Fabian socialism is a natural and practically inevitable outgrowth of English liberalism and utilitarianism after Bentham and Mill. In other words, Fabianism, in his view, could not have arisen in any other nation since it relied entirely on unspoken assumptions unique to England at that time and place.

Schumpeter has a little section on Sweden in which is excoriates American socialists for constantly looking to them as an example to follow:

Take Sweden for an instance. Like her art, her science, her politics, her social institutions and much besides, her socialism and her socialists owe their distinction not to any peculiar features of principle or intention, but to the stuff the Swedish nation is made of and to its exceptionally well-balanced social structure. That is why it is so absurd for other nations to try to copy Swedish examples; the only effective way of doing so would be to import the Swedes and to put them in charge. The Swedes being the people they are and their social structure being what it is, we shall have no difficulty in understanding the two outstanding

characteristics of their socialism. The socialist party, almost always ably and conscientiously led, grew slowly in response to a very normal social process, without any attempt to push ahead of normal development and to antagonize for the sake of antagonizing. Hence its rise to political power produced no convulsions. Responsible office came naturally to its leaders who were able to meet the leaders of other parties on terms of equality and largely on common ground: to this day, though a communist group has of course developed, the differences in current politics reduce to such questions as whether a few million kroner more or less should be spent on some social purpose accepted by all. And within the party, the antagonism between intellectuals and labor men only shows under the microscope precisely because, owing to the level of both, there is no great cultural gulf between them and because, the Swedish social organism producing a relatively smaller supply of unemployable intellectuals than do other social organisms, exasperated and exasperating intellectuals are not as numerous as they are elsewhere. (p. 325)

Again, the interference we can take from Schumpeter is clear: their social and political systems are simply a reflection of ‘who they are’ as a people. Swedish-style socialism cannot work if you substitute out the Swedes themselves.

In contrast, Schumpeter views the socialism of Russia as a foreign import, and – contrary to the prevailing intellectual current of his time – paints a more sympathetic picture of the Tsarist regime as being ‘appropriate’ to the nation:

To many of the intellectuals, the form of government then prevailing — an absolute monarch (autocrator) heading a huge bureaucracy and allied with the landed aristocracy and the church—was of course abomination. And public opinion all over the world has accepted their reading of history. Even writers most hostile to the regime that followed upon that of the tsars invariably make haste to assure their readers that they are duly horrified at the monstrosity of tsarism. Thus the simple truth has been entirely lost in a maze of cant phrases. As a matter of fact, that form of government was no less appropriate to the social pattern that had produced it than was the parliamentary monarchy in England and the democratic republic in the United States. The performance of the bureaucracy, considering the conditions under which it had to work, was far above what the world has been made to believe; its social reforms, agrarian and other, and its halting steps toward a diluted type of constitutionalism were all that could have been expected in the circumstances. It was the imported radicalism and the group interest of the intellectuals that clashed with the spirit of the nation and not the tsarist monarchy which on the contrary had a strong hold upon the vast majority of all classes. (p. 326)

Schumpeter was alert to the extent to which narrow sectional ethnic interests played in various socialist movements. Thus, when he discusses socialism in Austria, he says:

Now this party was also officially Marxist. The little circle of brilliant Jews that formed its intellectual nucleus … The relations with the German party were close and cordial. At the

same time, everyone knew that [Victor] Adler would stand no nonsense. Having, for

cultural and racial reasons, much more authority over his intellectual

extremists than Bebel ever had over his, he was able to allow them all the

Marxism they wanted in their cafés and to use them whenever he saw fit

without letting them interfere with what really mattered to him, the

organization and the party press, universal suffrage, progressive legislation

and, yes, the proper working of the state. (p. 348)

Schumpeter plainly saw the Bolsheviks under Lenin as a foreign group imposing foreign ideals on Russia which were then partly reversed or undone by Stalin who returned Russia to something like its more natural form of authoritarianism. Hence, Stalin is for Schumpeter: ‘a Russian statesman acting on behalf of national Russian interests as seen from the standpoint of a streamlined despotism.’ (p. 361) This is in contrast to the Marxist (Jewish) internationalist lie (projection?) ‘that the proletarian has no country and that class war is the only war that concerns him’ (p. 353) One of the effects of World War I was, according to Schumpeter, that socialist parties everywhere had to drop this absurd Marxist doctrine and that the Russians were, if anything, late to do so under Stalin.

When Schumpeter turns his attention to the USA, he finds that ‘intellectuals in New York’ (a euphemism?) were unable to affect public opinion or the direction of home-grown socialism sufficiently to give it anything but a practical and labour-union focus:

The most important difference was between the respective intellectual groups: unlike Russia, the United States did not, until the end of the nineteenth century, produce an under-employed and frustrated set of intellectuals. The scheme of values that arose from the national task of developing the economic possibilities of the country drew nearly all the brains into business and impressed the businessman’s attitudes upon the soul of the nation. Outside of New York, intellectuals in our sense were not numerous enough to count. Most of them moreover accepted this scheme of values. If they did not. Main Street refused to listen and instinctively frowned upon them, and this was much more effective in disciplining them than were the methods of the Russian political police. Middle-class hostility to railroads, utilities and big business in general absorbed almost all there was of “revolutionary” energy. (p. 331)

He finds in America (before World War 2) that the worker has a largely entrepreneurial character somewhat in contrast to the ‘state-broken’ English worker:

The average competent and respectable workman was, and felt himself to be, a businessman. He successfully applied himself to exploiting his own individual opportunities, to getting on or, in any case, to selling his labor as advantageously as possible. He understood and largely shared his employer’s way of thinking. When he found it useful to ally himself with his peers within the same concern, he did so in the same spirit. … Thus that great sociologist, the man in the street, has been right once more. He said that socialism and socialists were un-American. (pp. 331, 336)

In America, socialism was introduced, Schumpeter argues, by stealth through the New Deal. He even goes so far as to compare Franklin D. Roosevelt to Lenin based purely on his tax policies:

To an extent which is not generally appreciated, the New Deal was able to expropriate the upper income brackets even before the war. One indication will have to suffice, one that shows no more than the effects of the increase in the (personal) Income and Surtax and these only up to 1936: in 1929, when Total Income Paid Out was estimated at 80.6 billion dollars, the brackets above $50,000 (taxable income) retained 5.2 billions after income and surtax; in 1936, when the total of income paid out was estimated at 64.2 billion dollars, not quite 1.2 billions. Taxable income above $100,000 was even then wholly absorbed if account be taken of estate taxes. From the standpoint of naïve radicalism, the only trouble with these and subsequent measures of confiscation is that they did not go far enough. But this does not alter the fact with which we are concerned for the moment, viz., that irrespective of the war, a tremendous transfer of wealth has actually been effected, a transfer that quantitatively is comparable with that effected by Lenin. (p. 381)

The introduction to my edition of the book, by Richard Swedberg, has this interesting note:

Sometimes he lashed out in anger, and wrote hateful statements in his diary about the blacks, the Jews and Roosevelt. While earlier he had vented his anger only in private (primarily, it seems, in his diary), he now had outbursts in public also. This dark side of Schumpeter was very difficult for those of his friends who were still loyal to him. While it is the scholarly consensus that Schumpeter was basically not pro-Nazi, some of his statements from these years were nonetheless perceived as pro-Hitler. According to one of Schumpeter’s favorite students at Harvard, for example, ‘in the Second World War [Schumpeter] was pro-Hitler, saying to anyone who cared to listen, that Roosevelt and Churchill had destroyed more than Genghis Khan’. (p. xiv)

When Schumpeter turns to France, he shows that key factors were missing in France for socialism proper to take root. This is at first a surprising conclusion, but when one considers the argument, it carries much force:

First, its ideological history goes further back and is perhaps more distinguished than that of any other. But no single variety of it ever crystallized so completely and commanded allegiance so widely as did the socialism of, say, the Fabian type on the one hand and of the Marxian on

the other. Fabian socialism requires English political society, and nothing like that developed in France—the great revolution and the subsequent failure of the aristocratic and the bourgeois elements to coalesce prevented it. Marxian socialism requires a broad and unified labor movement; or, as a rallying creed for intellectuals, it requires cultural traditions quite uncongenial to French limpidité. But all the other socialist creeds that have so far emerged appeal only to particular mentalities and social locations and are sectarian by nature. Second, France was typically the country of the peasant, the artisan, the clerk and the small rentier. Capitalist evolution proceeded by measured steps and large-scale industry was confined to a few centers. Whatever the issues that divided these classes, they were economically conservative at first — nowhere else did conservatism rest on so broad a basis — and later on lent increasing support to groups that sponsored middle-class reform, among them the radicaux-socialistes, a party that can be best described by saying that it was neither radical nor socialist. Many workmen were of the same sociological type and of the same mind. Many professionals and intellectuals adapted themselves to it, which accounts for the fact that over-production and under-employment of intellectuals, though it existed, failed to assert itself as we should otherwise expect. (pp. 336-7).

In Schumpeter’s analysis, France is a nation that subsists on short-lived temporary political alliances between groups that have natural mutual antagonisms which perhaps explains why that nation seems so unstable in comparison to Britain. In addition, looking a bit later, he argues that syndicalism cannot be traced intellectually:

For syndicalism is not merely revolutionary trade unionism. This may mean many things which have little to do with it. Syndicalism is apolitical and anti-political in the sense that it despises action on or through the organs of traditional politics in general and parliaments in particular. It is antiintellectual both in the sense that it despises constructive programs with theories behind them and in the sense that it despises the intellectual’s leadership. It really appeals to the workman’s instincts—and not, like Marxism, to the intellectual’s idea of what the workman’s instincts ought to be—by promising him what he can understand, viz., the conquest of the shop he works in, conquest by physical violence, ultimately by the general strike. Now, unlike Marxism or Fabianism, syndicalism cannot be espoused by anyone afflicted by any trace of economic or sociological training. There is no rationale for it. (p. 339)

In this reading, Georges Sorel was a post-hoc rationalisation for something that had already happened a harnessing of a ‘social force that was and is revolutionary in a sense in which Marxism is not’ (p. 341)

Schumpeter has a great many other things to say about many other nations, not least a long section on Germany, but let us leave it there. What I wanted to draw attention to here are the advantages of particularism in the analysis of intellectual traditions. Schumpeter’s discussion of ‘socialism’ is not contend just to point at Marx and say ‘therefore’, he looks at the specifics of each and every nation and then outlines why socialism took this or that course in each country. Hence ‘Every country has its own socialism’ (p. 325) This, I think is an important way of thinking. Just as there can be no general theory of socialism to fit the specifics of every nation, there can be no general theory of nationalism or anything else, if we are to be fully serious about the extent to which the ethnos of a people matter. I appreciate how thorough-going and consistent Schumpeter is in this regard, and it’s something we should be aware of constantly in current struggles.

[i] Quotations from Joseph Schumpeter, Capitalism, Socialism and Democracy (1943; New York and London: Routledge, 1994).